Incorporating a Norwegian limited company (aksjeselskap, AS) is a process that takes time. Between signing the incorporation documents and completing registration in the Register of Business Enterprises (Foretaksregisteret), days or even weeks may pass. During that period, there may be a need to sign contracts, lease premises or hire staff. But who is actually responsible for those obligations – and what happens once the company is registered?
The Company Has No Legal Capacity Until Registration
Under Section 2-20 of the Norwegian Companies Act (aksjeloven), a limited company cannot as a legal entity acquire rights or incur obligations towards third parties before it is registered in the Register of Business Enterprises. This is a fundamental rule: it is the moment of registration that gives the company legal capacity in private law relationships.
There are two exceptions. The company may already be bound by obligations arising directly from the incorporation document – for example, agreements to acquire assets included as incorporation conditions – or by specific statutory provisions, such as the ability to appoint a CEO and engage an auditor during the incorporation process.
Personal Liability for Those Who Act on the Company's Behalf
If someone enters into contracts in the company's name before registration, and the obligation is not already binding on the company under the exceptions above, those who incurred the obligation are personally and jointly liable. This will typically mean board members, or the CEO if one has already been appointed.
The liability is not limited to the person who personally signed the agreement. If other board members were aware of the obligation, or had authorised the person who acted, they too may be held liable.
The personal liability falls away if it was clear at the time of contracting that the obligation was incurred on behalf of a company in the process of incorporation, such that the counterparty could have had no reasonable expectation of personal liability.
What Happens When the Company Is Registered?
Once the company is registered in the Register of Business Enterprises, the company automatically takes over the obligations incurred on its behalf prior to registration – provided the obligation falls within what would otherwise bind the company under the general rules on representation. No separate approval from the company is required. At the same time, the personal liability of those who entered into the agreement falls away.
Obligations entered into on behalf of a future company before incorporation, and without being made an incorporation condition, are not automatically assumed by the company upon registration. Such agreements must be separately approved by the company after it has been incorporated.
The Counterparty's Right to Withdraw
Section 2-20 gives the counterparty – the party who contracted with the unregistered company – a limited right to withdraw from the agreement:
- If the counterparty knew that the company was unregistered, they may withdraw if the company is not filed for registration within the required deadline, or if the filing is rejected before that deadline expires. Once the company is registered, the right to withdraw lapses.
- If the counterparty did not know that the company was unregistered, they have an unconditional right to withdraw up until the company is registered. This right applies regardless of whether the company is subsequently registered.
Only actual knowledge of the lack of registration is relevant – it is not sufficient that the counterparty ought to have known.
The parties may depart from these rules by express agreement.
Practical Implications for Company Founders
Many founders want to hit the ground running and enter into agreements while the company is still being incorporated. In many cases this is entirely legitimate – but it is important to understand that until registration is completed, you are personally liable for the obligations you take on in the company's name.
To limit your exposure:
- Delay significant contracts until registration is complete, where practically possible.
- State explicitly in the agreement that you are acting on behalf of a company in the process of incorporation, so that the basis for any liability is clear.
- File for registration as quickly as possible after the incorporation documents are signed and the share capital has been paid in.
At Stift, we handle the entire incorporation process for you – from preparing the incorporation documents to completing registration in the Register of Business Enterprises – so you can minimise personal exposure and start trading with confidence. Get in touch to get started.